What is stagflation

Stagflation is an economic condition characterized by a combination of stagnant economic growth, high unemployment, and high inflation. This phenomenon is particularly challenging because it combines the economic malaise of stagnation with the price instability of inflation. Typically, in a healthy economy, high inflation might accompany strong economic growth, and conversely, low inflation or deflation might accompany economic contraction. However, stagflation presents policymakers with a dilemma because the conventional tools used to address one problem, such as monetary policy to combat inflation or fiscal policy to stimulate growth, may exacerbate the other issues. Stagflation was notably experienced in some Western economies during the 1970s, but it's relatively rare compared to more typical economic scenarios.